The FTC also entered into a detailed settlement agreement with the
respondents which prohibits them from engaging in certain software download
related practices.

This case involves the practices of a small, disreputable and unethical adware
company. Nevertheless, the settlement agreement may provide
guidance for the wide range of businesses that provide software downloads as to what
acts, and omissions, the FTC considers to be unfair or deceptive business practices.

There is no adware specific federal statute. However, Section 5 of the FTC
Act, which is codified at
15 U.S.C. § 45, provides that "Unfair methods of competition in or affecting
commerce, and unfair or deceptive acts or practices in or affecting commerce,
are hereby declared unlawful".

Lydia Parnes, Director of the FTC's Bureau of Consumer Protection, stated in
a release that
"it violates federal law to secretly install software that forces consumers to
get pop-ups that disrupt their computer use".

In July of 2006, 180solutions, Inc. merged with Hotbar, Inc. and changed the combined
company's name to Zango, Inc. The other respondents, Smith and Todd, are named individually, and in their capacity as officers of Zango, Inc.

The complaint alleges that the respondents distributed by
internet downloading "adware" that monitors the internet use of computers and
displays pop-up advertisements based on that internet use. It states that the
respondents distributed their adware through affiliates and sub-affiliates
acting on their behalf who bundled their adware with purportedly free software
programs, which the complaint describes as "lureware".

The complaint states that "When installing the lureware, consumers often have
been unaware that Respondents' adware would also be installed because that fact was not
adequately disclosed to them. In some instances, no reference to Respondents’ adware was
made on the website offering the lureware or in the install windows. In other instances,
information regarding Respondents’ adware was available only by clicking on inconspicuous
hyperlinks contained in the install windows or in lengthy terms and conditions regarding
the lureware. Because the lureware often was bundled with several different programs,
the existence and information about the effects of Respondents' adware could only be
ascertained, if at all, by clicking through multiple inconspicuous hyperlinks."

The complaint also states that the respondents, acting through
affiliates or sub-affiliates, installed their adware by "drive-by downloads", by
"exploiting security vulnerabilities in Internet web browsers", which downloads
involve no notice to the consumer.

The complaint alleges that "Respondents knew or should have known that there was
widespread failure by their affiliates and sub-affiliates to provide adequate notice of
their adware and obtain consumer consent to its installation."

The complaint further alleges that the respondents made "identifying, locating,
and removing their adware extremely difficult for consumers".

The FTC entered into an
Agreement
Containing Consent Order [12 pages in PDF] with the respondents. The respondents admit
no wrongdoing or violation of law. However, the respondents agree not to engage in certain
adware distribution practices, and make a $3 Million "payment" to the FTC.

The agreement provides that the respondents cannot install software
on consumers' computers without obtaining express consent. It also requires
respondents to make their adware capable of uninstallation. It also regulates
the relationship between the respondents and their affiliates.

The CDT's Ari Schwartz stated in a
release that "This is a
landmark settlement, and one that sends an important message to companies that
have built their businesses on the backs of Internet users without any concern
for what those users want ... With this action, the FTC has again made clear
that it is prepared to go after companies, regardless of size or market position, that
engage in unfair and deceptive practices to distribute their products."

The CDT release adds that "More important than the $3 million payment called
for under the settlement, is a requirement that Zango cease communications with
Internet users who downloaded the Zango/180solutions software before Jan. 1,
2006. Not only does this provide relief for many unwitting Zango "users," it
also sends a message that companies will not be permitted to retain customer
bases built on patterns of unfair practices."

This case is In the Matter of Zango, Inc., formerly known as 180Solutions,
Inc., Keith Smith and Daniel Todd, FTC file number 052 3130.

Background. On September 20, 2006, the
Copyright Royalty Board (CRB), at the request
of SoundExchange, Inc., referred a question of
law to the Register of Copyrights regarding the conditions under which an entity may be
a "preexisting subscription service" within the meaning of 17 U.S.C. §
114(j)(11).

Subsection (d)(2) provides a statutory license for
certain performances "of a sound recording publicly by means of a subscription
digital audio transmission ... , an eligible nonsubscription transmission, or a
transmission ... that is made by a preexisting satellite digital audio radio
service". Subsection (d)(2)(B) contains the reference to "preexisting
subscription service" that is at issue. Subsection (j)(11) provides a definition
of "preexisting subscription service".

Subsection (j)(11) provides that a "preexisting
subscription service" means "a service that performs sound recordings by means
of noninteractive audio-only subscription digital audio transmissions, which was
in existence and was making such transmissions to the public for a fee on or
before July 31, 1998, and may include a limited number of sample channels
representative of the subscription service that are made available on a
nonsubscription basis in order to promote the subscription service."

SoundExchange collects and distributes royalties from various digital music
services on behalf of artists and record companies.

The MO states that the CRB asked this: "Is the universe of preexisting
subscription services -- defined in 17 U.S.C. Sec. 114(j)(11) as services which
perform sound recordings by means of noninteractive audio -- only subscription digital
audio transmissions and which were in existence and making such transmissions to the
public for a fee on or before July 31, 1998 -- [limited by] law to only Muzak (provided
over the DiSH Network), Music Choice, and DMX?" (Parentheses and brackets in original.
Footnotes omitted.)

Arguments of Affected Parties.DMX,
Inc. and Sirius Satellite Radio, Inc.
argued that the Section 114 term "service" means the use of the music, while
SoundExhange argued that it means the business entity operating the service.

DMX argued that it is eligible. It wrote that "any subscription service that has been in existence and
making noninteractive audio-only subscription digital audio transmissions to the
public for a fee since prior to July 31, 1998 is a ``preexisting subscription
service´´ for the purposes of the compulsory license available under Section
114(d)(2)(B) ..." DMX is represented by
Bruce Rich of the law firm of Weil Gotshal &
Manges.

SoundExchange argued that DMX is not eligible on the grounds that it acquired
the entity providing the service out of the bankrupt estate of the previous
owner. It argued that only Muzak and Music Choice, which was formerly known as
Digital Cable Radio Associates, are eligible. SoundExchange is represented by
Thomas Perrelli of the
law firm of Jenner & Block.

Sirius argued that "The Sirius audio service, when carried over the DISH
Network, is also entitled to treatment as a preexisting subscription service".
Sirius is represented by
Bruce Joseph of
the law firm of Wiley Rein & Fielding.

SoundExchange responded that DISH/Echostar is not eligible, and hence,
neither is Sirius.

Opinion of the Register of Copyright. The Copyright Office's Memorandum Opinion
(MO) states that Section 114 "is not a model of clarity or consistency".

It states that "In sum, eligibility for a preexisting subscription service
license is limited to subscription services that satisfy the definition of 17
U.S.C. Sec. 114(j)(11), which includes being in operation on July 31, 1998
and continuously operating since that time. In 1998, Congress identified those
entities which satisfied the definition and were eligible at that time as being
DMX, Music Choice and the DiSH Network. Therefore, today, those same services
are the only ones that may qualify as being preexisting subscription services,
since they are the only ones which can satisfy the requirement of being in
operation as of July 31, 1998."

It adds that "Moreover, for purposes of participating in a rate setting
proceeding, the term ``preexisting subscription service´´ is best interpreted as
meaning the business entity which operates under the statutory license. A
determination of whether DMX is the same service that was identified by the
legislative history in 1998 and has operated continuously since that time
requires a factual analysis that is beyond the scope of the Register's authority
for questions presented under 17 U.S.C. Sec. 802(f)(1)(B)."

The MO reasons that "the better reading of the statute is that the preexisting
services must be limited to the three named entities in the Conference Report, i.e.,
DMX (operated by TCI Music), Music Choice (operated by Digital Cable Radio Associates),
and the DiSH Network (operated by Muzak) that were in existence and making transmissions
of sound recordings by means of noninteractive audio-only subscription
digital transmissions on or before July 31, 1998." (Parentheses in
original.)

"The question remains, however, whether the designation applies to the type of
offerings made by the service or the business entity operating at the relevant time."
The MO concludes that "the beneficiary of the grandfather provision should be the
business entity that was providing the service at the time. While there is a debate
among the parties as to whether DMX today is the same business entity as it was in 1998,
the Office declines to reach this question because it would involve the interpretation
of facts that go beyond the scope of this inquiry."

The MO continues that "On the other hand, it is appropriate for the Office to
consider whether for purposes of Sec. 114 Sirius can provide the same type of
music service that Muzak offered in 1998 through DiSH Network. The answer to
this inquiry hinges on the status of DiSH Network and whether it or the music
service content provider offered over its network is the beneficiary of the
grandfather provision. On this point, Sirius concedes that DiSH Network is a
satellite television service which, in 1998, sought out a music service provider
to supply the audio music channels. It also notes that the Sec. 114 statutory
license covers only audio services and that the royalty fees are calculated based on the
revenues associated with the provision of the sound recordings and not the
revenues generated by DiSH Network. We also note that DiSH Network is the
apparent beneficiary of the exemption in Sec. 114(d)(1)(C)(iii) which allows a
direct broadcast satellite service provider to retransmit to the listener
noninteractive music programming provided by a licensed source. Yet in spite of
these facts, Sirius maintains that DiSH Network is the preexisting subscription
service because it was specifically named in the legislative history, or
alternatively, that Sirius itself is the beneficiary of the designation as a
preexisting service through DiSH, because it is the provider of music services
over the DiSH Network."

"While it is clear that DiSH is identified in the legislative history as the
preexisting service, often without any reference to Muzak as the provider of the
audio channels carried over the DiSH network, the DiSH Network standing alone
cannot be viewed as the preexisting service, nor does it have a need to be
designated as such because of the exemption it enjoys under Sec. 114(d)(1)(C)(iii).
Section 114 involves the licensing of the public performance right to make
digital transmissions of sound recordings. In 1998, the service making these
transmissions over the DiSH Network was Muzak. Thus, it was Muzak that made the
transmissions under the Sec. 114 statutory license and it was Muzak that
incurred the obligation to pay the royalties. Because DiSH itself did not
operate under the Sec. 114 statutory license, it makes no sense for it alone to
be considered the preexisting service. Thus, the reference to DiSH Network in
the legislative history is best interpreted as including the actual music
service that did offer subscription transmissions of sound recordings over the
DiSH Network at that time, i.e., Muzak."

The MO adds that "to allow Sirius to step into the shoes of Muzak and offer
the same type of subscription transmissions is inconsistent with a narrow
construction of the grandfather provision."

FCC Again Delays Approval of AT&T BellSouth
Merger

11/3. The Federal Communications Commission (FCC)
again postponed consideration of its order approving the merger of AT&T and BellSouth.
The FCC had previously announced that this item was on the agenda for its event titled
"Open Meeting", scheduled for 9:30 AM on Friday, November 3, 2006. See, FCC's
notice [PDF] of deletion of agenda item.

FCC Declares that BPL is an Information
Service

11/3. The Federal Communications Commission (FCC)
adopted, but did not release, a Memorandum Opinion and Order (MOO) that declares that
broadband over power line (BPL) enabled internet access service is an information service.

The FCC issued a short
release [1 page in PDF] describing this MOO, and four of the Commissioners
made brief oral statements and released short written statements. Commissioner
Robert McDowell did not participate in approving this MOO.

The FCC release states that this MOO "finds
that the transmission component underlying BPL-enabled Internet access service
is ``telecommunications,´´ and that the provision of this telecommunications
transmission component as part of a functionally integrated, finished BPL-enabled
Internet access service offering is an information service. This approach is
consistent with the framework that the Commission has established for cable
modem service and wireline broadband Internet access service, furthering the
Commission’s goal of regulating like services in a similar manner."

FCC Chairman Kevin Martin wrote in his
statement [PDF] that this decision provides regulatory neutrality, and "the
regulatory certainty necessary to foster competition between different broadband
platform providers".

Commissioner Deborah Tate wrote in her
statement [PDF] that with this decision the FCC is "applying only a light
regulatory touch".

Commissioner Jonathan Adelstein wrote in his
statement
[PDF] that this MOO fails to address consumer privacy, "Truth-in-Billing rules,
access for persons with disabilities, and the preservation and advancement of universal
service".

He also referenced state regulation. He said that "I appreciate the willingness of
Chairman Martin and my colleagues to work with me to ensure that this Order does not
unnecessarily limit states’ ability to address important issues related to
the oversight of BPL."

Commissioner Michael Copps predicted in his
statement
[PDF] that "for the foreseeable future, new broadband services are destined
to be classified as Title I services".

But, he said that there exists an "indeterminate Title I regulatory limbo".
He elaborated that "Just relegating something to Title I doesn't provide the kind of
certainty that either business or consumers are entitled to"

He wrote that "we are nowhere near finished defining what being an information
service actually means. Yes, we have clarified some questions about E911 and CALEA and
decided (unwisely, in my view) that broadband providers need not contribute to universal
service." (Parentheses in original.)

He enumerated some of the issues that remain in limbo for BPL service providers, including
privacy, disability access, pole attachments, or "cross-subsidization".

Justice Scalia's dissent in the Brand X case may be relevant to FCC's
ongoing consideration of how to classify services, and how to regulate information services. He wrote in 2005
that "what the Commission hath given, the Commission may well take away".

The FCC's just adopted decision relieves BPL providers of the common carrier
regulatory regime set forth in Title II. However, the FCC asserts ancillary
Title I authority to regulate information services, and has done so to reapply
components of the old telecommunications regulatory regime, or to apply new
regulation for the first time to previously unregulated services.

Moreover, exercise of ancillary authority, unlike exercise of Title II
authority, is hardly constrained by statute, and is difficult to challenge in court.

Walter McCormick, head of the USTelecom, stated
in a
release that "Today's determination by the FCC is a very good step for
consumers. This ruling acknowledges that regardless of how the service is
delivered, broadband providers should all have the same opportunities in today's
marketplace. It also shows that in an already highly competitive market, there
is no need for outdated and unnecessary regulations. This is clearly the right
decision to ensure a vibrant market for high-speed Internet service."

This item is FCC 06-165 in WC Docket No. 06-10. This proceeding is titled "United
Power Line Council’s Petition for Declaratory Ruling Regarding the Classification of
Broadband over Power Line Internet Access Service as an Information Service".

Adelstein Comments on Pretexting and
Privacy

11/3. Federal Communications Commission (FCC)
Commissioner Jonathan Adelstein commented upon data privacy in his statement regarding
the broadband over power line (BPL) Memorandum Opinion and Order. His comments applied
to a wide range of communications services other those over power lines.

Adelstein (at right) wrote that
"the widespread and unauthorized proliferation of consumer
telephone call records has been a sharp reminder that this Commission has an obligation
to ensure that consumers' privacy expectations are met. But that privacy concern is not
limited to the narrowband world. Consumers don't care whether their sensitive information
is transferred by copper wire, fiber optic cable, or over a power line connection. They
merely want us to implement and enforce the legal protections afforded by Congress."

He added that "We should act immediately to make sure that we have adequate
safeguards in place to protect the consumers' sensitive information."

The FCC has an open rule making proceeding. On February 10, 2006, the FCC adopted a
Notice of Proposed Rulemaking (NPRM). This is FCC 06-10 in Docket No. 96-115 and RM-11277.
See, story titled "FCC Adopts NPRM Regarding Privacy of Consumer Phone Records"
in TLJ Daily E-Mail Alert
No. 1,308, February 13, 2006, and
story titled
"FCC Rulemaking Proceeding on CPNI May Extend to Internet Protocol Services"
in TLJ Daily E-Mail Alert
No. 1,310, February 15, 2006.

However, while Adelstein referenced "the
widespread and unauthorized proliferation of consumer telephone call records",
which involves pretexting, such as that involved in the HP scandal, he made no
reference to the impact of NSA and law enforcement activities on consumer privacy.

More FCC News

11/3. The Federal Communications Commission
(FCC) adopted, but did not release, a Report and Order (R&O) in its proceeding
titled "Revision of Procedures Governing Amendments to FM Table of Allotments
and Changes of Community of License in the Radio Broadcast Services". This R&O
is FCC 06-163 in MB Docket No. 05-210. The FCC issued a short news
release [2 pages in PDF] that describes this item.

11/3. The Federal Communications Commission (FCC)
adopted, but did not release, Notice of Proposed Rulemaking (NPRM) in its proceeding
titled "In the Matter of the Effects of Communications Towers on Migratory
Birds". This NPRM is FCC 03-187 in
WT Docket No. 03-187. The FCC issued a short news
release [2 pages in PDF] that describes this item.

11/3. The U.S. District Court (EDNY)
sentenced Sanjay Kumar to serve 12 years in prison, and pay an $8 Million
fine, following his previous pleas of guilty to securities fraud and other
offenses related to his fraudulently inflating the quarterly revenue and
earnings of Computer Associates (CA). Kumar was previously Ch/CEO of CA. See, SEC
release.

11/3. The U.S. Patent and Trademark Office
(USPTO) published a
notice in the Federal Register that announces that, effective February 1,
2007, it is eliminating the Disclosure Document Program. The USPTO wrote
that this program was implemented in 1969 "in order to provide an alternative
form of evidence of conception of an invention", but that "few, if any,
inventors obtain any actual benefit from a disclosure document". It added that
"a provisional application for patent affords better benefits and protection to
inventors than a disclosure document". See, Federal Register, November 3, 2006,
Vol. 71, No. 213, at Pages 64636-64639.

Internet Governance Forum Discusses IDNs

11/2. The Internet Governance Forum
(IGF) met in Athens, Greece, on October 30 through November 2, 2006. The topics
discussed included internationalized domain names (IDNs), access to the
internet, interoperability, the conversion to IPv6, security, and freedom of
expression on the internet.

See also, the IGF's web
page with hyperlinks to transcripts of speeches and panel discussions.

He stated that "As increasing amounts of information find their ways into the
Internet’s archives, it is vital that we preserve their accessibility,
renderability and interpretability. Digital documents often need to be
interpreted by specific software packages to be rendered in understandable
form."

Cerf said that "We will need to assure that the bits we preserve on digital
media can also be read and understood not only by people but by computers
programmed to help us manage this ocean of information. Steps are needed to
assure that the information we accumulate today will be usable not merely
decades but centuries and even millennia into the future. We need to preserve
access to application software, operating systems and perhaps even hardware or
simulators so as to retain the ability to make effective use of our digital
archives."

Cerf also discussed IDNs, and urged preservation of global interoperability.
He said that there is a strong interest in "the ability to register domain names
written in the characters used in their preferred languages and therein lies a
huge technical challenge. Such domain names are sometimes called
``International Domain Names´´ or IDNs for short."

He stated that "One of the most important aspects of the Internet is the
ability for every user to make unambiguous references to every registered domain
name. Historically, this global feature has been achieved in part by restricting
host domain names to be expressed in a small subset of the Latin characters A-Z,
the digits 0-9 and the hyphen ``-´´. It is well understood that this will not
suffice for users whose native languages use characters other than these. At the
same time, it is vital to preserve the global ability to refer to and use every
domain name. This global interoperability needs to be preserved especially as
new languages are supported by the UNICODE system through the addition of new
characters needed to express them."

He emphasized that domain names are simply unique identifiers, and are not
general natural language expressions. He reiterated that they "must be unique,
and names registered today must continue to work into the distant future, no
matter what new characters are added to UNICODE to support the expression of
additional written languages."

He also reported that the "ICANN is already conducting tests to determine the
readiness of the root zone file and its associated root servers and resolvers to
house or work with internationalized top level domains. Adding IDNs at all
levels in the domain names system potentially affects every application that
makes use of domain names."

He elaborated that "The mechanisms of the domain name system make demands on
the normalization and matching of domain name strings that far exceed the
simpler requirement that natural language strings be renderable using UNICODE. A
misstep in the specifications of the IDN rules could easily and permanently
break the Internet into non-interoperable components. New work in the Internet
Engineering Task Force and in the ICANN committee on IDNs, among others, is
pointing the way towards specific solutions."

Viviane Reding, the European Commissioner for Information Society, gave a
speech at the IGF on October 30 in which she addressed IDNs. She said that
IDNs "are sometimes wrongly seen as a mere technical issue".

She said that "Notwithstanding the
important considerations on stability that need to be addressed, there is above
all a legitimate political imperative for the Internet to offer different
language scripts. Apart from users who want to be able to use, for example,
Chinese ideograms or Arabic scripts, there is the real danger that prolonged
delay in the introduction of IDNs could lead to a fragmentation of the Internet."

She added that "we should also think about multilingualism in
Internet governance mechanisms themselves. The Internet that we know and value
today has much of its roots in the developed world, in particular in Europe and
in the USA. English has been, and will continue to be, a very important and very
useful ``lingua franca´´ that facilitates cross-border and inter-cultural
cooperation between worldwide communities, such as scientists, engineers and
academics, or in the economic sectors."

Reding also discussed freedom of expression on the internet. She said that
the "flow of information that it
facilitates strengthens democratic processes, stimulates economic growth and
allows for cross-fertilizing exchanges of knowledge in a way never seen before.
Too often however, this very freedom is under attack from those that do not
value freedom of expression or disregard the economic and social benefits of
allowing a free flow of information within and across borders."

"Freedom is too
often seen as a threat by those who do not value human rights or want to impose
their vision of the world or their religious beliefs. A key objective for the
European Commission is therefore to keep the Internet as an open and
censorship-free zone where all the world's citizens can communicate freely with
each other without needing to seek the permission of anyone else, not least
their governments, to do so, in line with internationally recognised fundamental
rights", said Reding.

FTC Releases Report on Noerr Pennington
Doctrine

11/2. The Federal Trade Commission (FTC) released a
report [41 pages in PDF] titled "Enforcement Perspectives on the Noerr-Pennington
Doctrine". This is an doctrine that particularly affects antitrust liability. It
is applied or asserted in some patent related antitrust matters.

This doctrine allows businesses to combine and lobby to influence the legislative,
executive, or judicial branches of government or administrative agencies without antitrust
liability, because the First Amendment’s right of petition protects such activities.

Maureen Oldhausen, Director of the FTC's OPP stated in a
release that "When properly
applied, the Noerr doctrine serves important purposes in our representative democracy ...
Unnecessarily broad interpretations of the doctrine, however, can protect abuses of
government processes and impose significant costs on consumers."

The FTC report states that "A fundamental goal of the Commission’s antitrust
enforcement program is to prevent parties, acting either unilaterally or in concert, from
improperly acquiring and exercising market power to the detriment of consumers. One of
the most effective ways for parties to acquire or maintain market power is through the
abuse of government processes. The cost to the party engaging in such abuse typically is
minimal, while the anticompetitive effects resulting from such abuse often are
significant and durable. Thus, the reach of the antitrust laws to conduct
that abuses government processes for anticompetitive ends is of particular
importance to the Commission’s enforcement program."

The report addresses "three types of conduct that can use government processes
to seek anticompetitive rewards: 1) requests for ministerial government acts; 2)
misrepresentations to a government decision maker in a non-political context; and 3)
repetitive requests for government action filed regardless of merit solely to use the
government process to suppress competition."

It also includes patent ambush practices. For example, a company may misrepresent to
a regulatory authority that certain information is non-proprietary and in the public
domain, while at the same time pursuing patents, in order to induce the regulator to
adopt regulations to require use of the some to be patented technology. The FTC
addressed this practice in it proceeding titled "In the Matter of Union Oil
Company of California".

The report recommends that the FTC should
"Clarify that conduct protected by Noerr does not extend to filings, outside of
the political arena, that seek no more than a ministerial government act."

Second, the report recommends that the FTC should "Clarify that conduct
protected by Noerr does not extend to misrepresentations, outside of the
political arena, that meet the standards set forth in the Commission’s Unocal
decision."

See also, the FTC's July 2004
opinion
[56 pages in PDF] in its Unocal proceeding, and
story
titled "FTC Rules Noerr-Pennington Doctrine Does Not Block Antitrust Action for
False Representations Regarding Patents During Standards Setting Process" in
TLJ Daily E-Mail
Alert No. 933, July 8, 2004.

Finally, the report recommends that the FTC should "Clarify that conduct
protected by Noerr does not extend to patterns of repetitive petitioning,
outside of the political arena, filed without regard to merit that employ
government processes, rather than the outcome of those processes, to harm
competitors in an attempt to suppress competition."

The report was written by staff of the FTC's Office of Policy Planning (OPP)
and Bureau of Competition (BOC).

The letter states that "Microsoft is coming to terms with Linux". It adds
that "Today, for the first time, Microsoft is collaborating directly with a
Linux and Open Source software vendor. With this news, Microsoft is saying that
Linux is an important part of the IT infrastructure. More importantly, Microsoft
announced today that it will not assert its patents against individual,
non-commercial developers. Novell has secured an irrevocable promise from
Microsoft to allow individual and non-commercial contributors the freedom to
continue open source development, free from any concern of Microsoft patent
lawsuits."

See also,
Patent Cooperation Agreement (PCA). The PCA provides that Microsoft
"covenants not to sue Novell's Customers and Novell's Subsidiaries' Customers
for infringement under Covered Patents of Microsoft on account of a such
Customers' use of specific copies of a Covered Product as distributed by Novell
or its Subsidiaries ... for which Novell has received Revenue (directly or
indirectly) for such specific copies; provided the foregoing covenant is limited
to use by a Customer of Novell (i) of such specific copies that are authorized
by Novell in consideration for such Revenue, and (ii) within the scope
authorized by Novell in consideration for such Revenue."

This agreement only covers Novell's Linux products.

More News

11/2. Federal Reserve Board (FRB) Governor
Susan Bies gave a
speech at Drake University in Des Moines, Iowa, titled "The Economic
Outlook". She stated that "Spending on equipment and software, which grew
quite rapidly from mid-2004 to early 2006, has advanced at a more moderate pace
lately. The recent slowdown in the growth of business sales would be expected,
all else equal, to have a damping influence on capital spending, and in fact
business confidence has moved down since the start of the year." However, she
added that "the demand for information technology equipment is also likely to be
well maintained, in part because of the recent introduction of a new generation
of microprocessing chips and more-efficient large servers."

11/2. Sen. Charles Grassley (R-IA),
the Chairman of the Senate Finance
Committee (SFC), and Sen. Max Baucus
(D-MT), the ranking Democrat on the SFC, wrote a
letter [PDF] to Mark Everson, Commissioner of the
Internal Revenue Service (IRS) regarding its Free
File program for electronic filing of tax returns. The wrote that "the IRS has
been putting the taxpayer second in line behind the tax preparation industry and the
result is negatively affecting participation in the Free File Program and the overall
growth of electronic filing." They also wrote that "The IRS needs to provide
better oversight of the Free File Program this coming filing season and should encourage
the members of the Free File Alliance to provide services to taxpayers that are truly
free. If the tax preparation industry cannot provide free basic filing services without
hidden costs and traps, perhaps it is time to consider having the IRS provide a direct
filing portal to enable all taxpayers to file electronically without cost." See
also, the Treasury Inspector General for Tax
Administration's (TIGTA) September 29, 2006,
report
titled "Use of the Free File Program Declined After Income Restrictions Were
Applied".

Continental installed a WiFi hotspot in its frequent flyer lounge at the
Boston Logan International Airport, in Boston, Massachusetts. It provides WiFi
access to its customers at no additional charge.

The MPA demanded removal of the antenna. The MPA asserted in a letter to Continental
(which is attached to the petition) that there is a "potential threat to public safety
caused by Continental’s unauthorized and unlawful wireless communications". The MPA
asserts that Continental's service creates an interference problem.

However, the correspondence attached to the petition suggests that the MPA's real
concern is not with radio frequency interference. Rather, Continental's free service is
interfering with the MPA's extraction of monopoly rents from WiFi users, most of whom are
not Boston residents.

Had the FCC not ruled that the MPA's restrictions are preempted by its OTARD rules,
other airports, and perhaps other municipal, state and local government entities, may have followed the MPA's example, and instituted regulation and of the provision of WiFi service.

FCC Commissioner Michael Copps
wrote in a
statement
[PDF] that "American consumers and businesses are free to install Wi-Fi antennas under
our OTARD rules -- meaning without seeking approval from their landlords".

He added that "while I certainly support strong licensing
regulation in some contexts, I think it is equally important that we leave other
portions of the spectrum open to unlicensed uses."

He also wrote that "multiple Wi-Fi operators in the airport will cause no
interference to the safety-of-life communications that the airport authority
conducts on its dedicated, separate, and licensed public safety channels."

FCC Commissioner Jonathan
Adelstein wrote in a
statement [PDF] that "Today we strike a victory for the WiFi revolution in the cradle
of the American Revolution. The WiFi movement embodies the spirit of American freedom,
and in our action we say ``don’t tread on me.´´ The movement has been one of the great
telecommunications success stories because it enables American consumers and businesses
to offer and receive broadband services at the most local levels -- at any time, in any
place."

The FCC's OTARD rules make no distinction between radio devices using licensed
technologies and those using unlicensed technologies under
Part 15 of the
FCC's rules. However, the just released MOO is the first time that the FCC has ruled in a
proceeding regarding application of the OTARD to unlicensed devices that operate under
Part 15.

Adelstein (at
right) commented that "I support the application of our OTARD rules to
unlicensed devices under Part 15 of our rules because these devices transmit and
receive fixed wireless signals as is required by OTARD. That Part 15 services
are ``unlicensed´´ does not mean that they should be treated differently than
``unlicensed´´ ones for purposes of our OTARD rules."

Subsection (a)(1) provides, in parts relevant to the FCC's analysis, that "Any
restriction ... on property within the exclusive use or control of the antenna user ...
that impairs the installation, maintenance, or use of ... An antenna that is ... Used ...
to receive or transmit fixed wireless signals ... is prohibited to the extent it so impairs
..."

Subsection (a)(1) provides in full that,

"(a)(1) Any restriction, including but not limited to any state or
local law or regulation, including zoning, land-use, or building regulations, or
any private covenant, contract provision, lease provision, homeowners'
association rule or similar restriction, on property within the exclusive use
or control of the antenna user where the user has a direct or indirect
ownership or leasehold interest in the property that impairs the
installation, maintenance, or use of:
(i) An antenna that is:
(A) Used to receive direct broadcast satellite service,
including direct-to-home satellite service, or to receive or transmit fixed
wireless signals via satellite, and
(B) One meter or less in diameter or is located in Alaska;
(ii) An antenna that is:
(A) Used to receive video programming services via
multipoint distribution services, including multichannel multipoint distribution
services, instructional television fixed services, and local multipoint
distribution services, or to receive or transmit fixed wireless signals
other than via satellite, and
(B) That is one meter or less in diameter or diagonal
measurement;
(iii) An antenna that is used to receive television broadcast signals; or
(iv) A mast supporting an antenna described in paragraphs (a)(1)(i),
(a)(1)(ii), or (a)(1)(iii) of this section;is prohibited to the extent it so impairs, subject to paragraph (b) of
this section." (Emphasis added.)

This section provides that certain state or local government restrictions are
prohibited. The FCC analyzed each element that is prerequisite to a finding of
preemption in light of the nature of Continental's WiFi service, and the MPA
restriction, and concluded the Continental is entitled to a determination that
the MPA's restriction is preempted by the rule.

The FCC wrote that Continental's antenna is of a size covered by the rule.

It also found that the antenna is located on property within the exclusive use and
control of Continental. The FCC held that Continental's leasehold interest, and control
over who has access to its lounge, suffice to meet this requirement. The FCC also rejected
the MPA's argument that lease provisions allowing it to access to the premises for
maintenance, security, construction work, or
to place utilities, defeats the exclusive use and control requirement.

The FCC rejected the argument advanced by the MPA
that Continental is not the "antenna user" under this rule.

The FCC also found that Continental's antenna is used to receive or transmit fixed
wireless signals. The FCC rejected the MPA's argument that since Continental did not
charge is customers extra for WiFi, this service was not commercial within the meaning
of Subsection (a)(2). The FCC reasoned that this subsection requires only that the
"signal", but not the service, be "commercial".

Section 1,4000 does not expressly reference "WiFi" by name, or reference it by
its specific technical characteristics. The MPA noted several technical
characteristics of WiFi service, and argued that the rule does not cover these.
The FCC rejected all such arguments.

The FCC next found that the MPA's restrictions meet the impairment requirement of
the rule.

The FCC next concluded that the MPA does not meet the public safety
exception. The MPA argued that public safety personnel might use WiFi in the
future, and that Continental's WiFi could interfere with that.

Subsection (b)(1) provides in part that "(b) Any restriction otherwise
prohibited by paragraph (a) of this section is permitted if: (1) It is necessary
to accomplish a clearly defined, legitimate safety objective ..."

The FCC wrote that "Even if the OTARD safety exception did apply
to RF interference issues, the safety exception would still not apply here
because the Wi-Fi device that Continental is using in the President’s Club
operates as permitted under Part 15 of our rules. Part 15 specifies power
levels, frequency bands, and conditions under which devices may transmit RF
signals without requiring a license. Part 15 devices do not receive interference
protection from other Part 15 devices. Therefore, because Massport’s airport
Wi-Fi backbone is composed of Part 15 devices, Massport has no right to operate
the airport Wi-Fi backbone free from interference from other Part 15 devices,
including Continental’s Wi-Fi device." (Footnotes omitted.)

Finally, the FCC rejected arguments of the MPA that the FCC should recognize exemptions
not included in the rule, such as a government buildings exemption.

Reaction. Gary Shapiro, head of the Consumer
Electronics Association (CEA), praised the FCC decision in a release. He said that
"making Wi-Fi available serves the traveling public, allowing anytime, anywhere
connectivity. The availability of Wi-Fi devices and service is needed to encourage
broadband deployment, which will provide enormous benefits to consumers and our
economy."

The FCC took almost 16 months to issue its opinion in this factually and
legally uncomplicated proceeding. However, the issue was more complicated
politically. The Boston airport, and airport authorities generally, opposed
OTARD preemption. The MPA is located in the state of Massachusetts.
Sen. John Kerry (D-MA) represents
Massachusetts, and is a senior member of the
Senate Commerce Committee, which
oversees the FCC. The FCC's release of this MOO coincides with Sen. Kerry's
speech in which he commented on the intelligence of U.S. armed forces personnel.

Copyright Office Publishes Notice of
Ringtones Opinion

11/1. The Copyright Office (CO) published a
notice in the Federal Register that announces, describes, and attaches a copy of, its
Memorandum Opinion [34
pages in PDF] to the Copyright Royalty Board
stating, with certain caveats, that the statutory license for making and distributing
phonorecords under the Copyright Act applies to ringtones.

The Recording Industry Association of America's
(RIAA) requested the ruling. Its General Counsel, Steven Marks, stated in a
release that "In an
ever-transforming digital marketplace, ringtones also represent an important new
way for the industry to recognize a return on its investment in music. This
decision injects clarity into the marketplace -- clarity that will help satisfy
fans' hunger for the latest hits from today's best artists by affording record
companies and ringtone providers the ability to move new offerings quickly and
easily to consumers. Ultimately, we're all seeking a vibrant mobile business.
This decision helps us further that goal."

11/1. Scott Wallsten will join the
Progress & Freedom Foundation (PFF) on November 13, 2006, as a Senior Fellow
and Director of Communications Policy Studies. He previously worked for the AEI-Brookings
Joint Center for Regulatory Studies and the
American Enterprise Institute (AEI). He has also worked as economist at The
World Bank, as a scholar at the Stanford Institute for Economic Policy Research,
and as a staff economist at the President's Council of Economic Advisers.

More News

11/1. The Federal Communications Commission (FCC) published a
notice in the Federal Register that announces, describes, and sets the
effective date of (January 2, 2007), its final rule amending its regulations that
impose obligations on broadcasters with respect to children's broadcasting.
See, Federal Register, November 1, 2006, Vol. 71, No. 211, at Pages 64154-64165. The FCC
adopted its Second Order on Reconsideration and Second Report and Order on September 26,
2006, and released its on September 29, 2006. It is FCC 06-143 in MM Docket No. 00-167.

11/1. Vice President Dick Cheney gave a political campaign
speech
in Kallispell, Montana, for Sen. Conrad Burns
(R-MT), and Rep. Denny Rehberg
(R-MT), and others. He discussed, among other things,
HR 5825,
the "Electronic Surveillance Modernization Act". The House approved this
bill on September 28, 2006, by a vote of 232-191. Republicans voted 214-13.
Democrats voted 18-177. See,
Roll Call No. 502. The
Senate has not voted on this bill. Cheney said that "To win this war, America
also needs the Terrorist Surveillance Program -- this is a program the President
set up right after 9/11, which allows the National Security Agency to monitor
international communications, one end of which we have reason to believe is
related to al Qaeda, or terrorist networks. The purpose is obvious: If people
inside the United States are communicating with al Qaeda, they are talking to
the enemy, and we need to know about it. Yet many leading Democrats have
denounced the President for this program. Recently, when a bill to authorize the
program came to a vote on the House floor, 177 Democrats -- 88 percent of the
House Democratic members voted no." VP Cheney argued that "the key question
before the voters on November 7th is whether or not this nation is serious about
fighting the war on terror. And there can be no doubt that George W. Bush,
Conrad Burns, and Denny Rehberg are serious about fighting and winning it."

11/1. The Copyright Office (CO)
published a
notice in the Federal Register announcing its "receipt of a notice of intent
to audit 2005 statements of account concerning the eligible nonsubscription and
subscription transmissions of sound recordings made by Live365, Inc.
(``Live365´´) under statutory licenses." See, Federal Register, November 1,
2006, Vol. 71, No. 211, at Pages 64317-64318.

11/1. Federal Reserve Board (FRB)
Chairman Ben Bernanke gave
a
speech in Washington DC titled "Community Development Financial
Institutions: Promoting Economic Growth and Opportunity". One of the points that
he made was that technology has led to a democratization of credit. He said
that "In recent years, advances in information and communication technologies,
improved methods of risk measurement and risk assessment, the availability of
more-comprehensive information about individuals' credit histories, and an
increased ability of retail lenders to obtain funds from capital markets have
led to what has been called the ``democratization´´ of credit."